22 US states face economic contraction; Consumers have now run out of excess savings

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Today, let’s dive into the choppy seas of the US economy, where the winds of recession are blowing strong, and consumers find themselves sailing in uncertain waters. It’s a tale of caution, resilience, and the ebb and flow of economic tides.

So, here’s the scoop: more than half of US states are currently experiencing a recession, and to add fuel to the fire, consumers have exhausted their excess savings. It’s a troubling combination that spells trouble on the horizon.

In the last quarter of 2023, a whopping 22 US states witnessed economic contractions, while only 20 states saw growth—a concerning trend reminiscent of the challenging times we faced back in 2020. You see, historically, when numbers dip this low, recessions often loom on the horizon.

But here’s the kicker: recessions don’t happen overnight. They creep in gradually, often starting with weaker and vulnerable states before spreading like wildfire to others. Once a certain tipping point is reached, it’s only a matter of time before the dominoes fall.

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Flashback to June 2022, when optimism prevailed as we touted the US’s ability to dodge a recession, thanks to a hefty $2.5 trillion in excess savings. Fast forward to today, and those savings are all but gone, leaving consumers grappling with tight purse strings.

And guess what? When consumers tighten their belts, retail sales take a hit. We’ve seen it before in 2009, when sales plummeted during the recession, only to rebound in the years that followed as people made up for postponed purchases.

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